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Building tools rental firm Ashtead Group has been among the finest performing shares within the FTSE 100 in latest many years. Nonetheless, earlier this month, it exited the blue-chip UK index, renamed itself Sunbelt Leases (LSE: SUNB), and has simply moved its main itemizing to the New York Inventory Trade (NYSE).
As a shareholder within the industrial firm (it nonetheless has a list within the UK), I see the transfer to the US market as an excellent one. Already, its share value is rising.
A logical transfer
The transfer to the NYSE and the title change have been logical, for my part. As a result of at this time, the corporate generates the majority of its revenues – and virtually all of its working revenue – from North America, the place the group operates beneath the title Sunbelt Leases. It’s additionally the US’s second largest participant available in the market behind United Leases.
Word that Sunbelt Leases is a widely known firm there – each time I’m over within the States I see its building tools (eg bulldozers) virtually in every single place. Against this, within the UK, the corporate’s comparatively unparalleled (regardless of being an enormous FTSE 100 winner over time).
By sticking its main itemizing within the US, it ought to open up its potential investor base considerably. Unexpectedly, there will likely be 1000’s extra institutional buyers that may purchase into the corporate (alongside a ton of retail buyers too).
I reckon there will likely be loads of curiosity within the industrial inventory as a result of the corporate operates in a rising business. Proper now, the US is constructing information centres, semiconductor manufacturing vegetation, infrastructure, and extra. So there’s prone to be sturdy demand for building tools within the years forward.
“The need from infrastructure, construction, industrial, events, and non-construction businesses for a strong rental partner is greater today than ever before, with customers increasingly deeming rental an essential part of their operations.”
Sunbelt CEO Brendan Horgan
An funding alternative?
Are the UK-listed shares price a glance at this time? I feel so. As I mentioned, the corporate has a beneficial backdrop. Assuming there’s no financial collapse within the US within the years forward (building leases is a cyclical market), Sunbelt ought to be capable of develop its revenues and earnings at a wholesome tempo.
It’s price noting that the corporate plans to share extra info with buyers on a 12 March earnings name and at its 26 March investor day. At these occasions it can present an replace on efficiency, development trajectory, strategic roadmap, and method to capital allocation.
One other factor to love right here is that the corporate is resistant to synthetic intelligence (AI). In any case, you possibly can’t ask Anthropic to generate a bulldozer.
As for the valuation, it seems affordable. Presently, the inventory trades on a price-to-earnings (P/E) ratio of round 20, falling to round 17 utilizing subsequent yr’s earnings forecast.
Clearly, that isn’t a cut price. However it additionally isn’t excessive for an organization with loads of development potential and an excellent long-term observe file.
Personally, I’ll be holding on to my UK-listed Sunbelt shares. I’m excited concerning the potential now the corporate’s listed within the US.
For my part, the shares are price contemplating at this time.
